SanDisk lost $57.8 billion in seven sessions on a China DRAM scare in a market it does not sell into
Seven straight lower closes cut 23.2% from the flash maker after China's ChangXin Memory Technologies targeted server DRAM, a market SanDisk does not sell into. Its fiscal Q4 disclosures describe a $93.9 billion contract book at floor prices with ceilings on top; the first conversion test lands on October 29.
Vincent Jiang · 3 min read
A DRAM scare, priced into a flash seller
SanDisk−7.55% — SanDisk, down 7.55 percent today, the NAND flash maker spun out of Western Digital−8.26% — Western Digital, down 8.26 percent today in February 2025, closed lower for the seventh session running on October 16, at $1,299.30 1. The streak cost 23.2%, about $57.8 billion of market value, leaving the company worth about $191.0 billion while the S&P 500 slipped 1.8% over the same week 1. Even after the fall, the stock is up 447.4% this year 1.
The trigger arrived mid-streak. ChangXin Memory Technologies+3.28% — ChangXin Memory Technologies, up 3.28 percent today (CXMT), now the world's fourth-largest DRAM maker by revenue 2, said on October 10 it would ship DDR5 RDIMM modules, the registered memory used in servers, on a 4F² cell design that lifts density 30 to 50 percent in the same area, before the end of 2026 2. Its president, Cao Kanyu, spoke at a Shanghai industry event 3.
No specifications, no yields, no customers
Samsung fell 7.4% and SK hynix−6.61% — SK hynix, down 6.61 percent today 10.1% in Seoul the next session; SanDisk, Western Digital and Seagate−8.66% — Seagate, down 8.66 percent today slid in US premarket trading 3. CXMT published no specifications, no yields and no customers 3. The product it named is DRAM; SanDisk sells NAND flash, the storage chips in solid-state drives 4.
Floors under the book, ceilings over it
On its fiscal fourth-quarter call in August, SanDisk disclosed eight multi-year customer agreements worth a minimum $93.9 billion at contractual floor prices, averaging more than four years, with committed volumes and prices bounded by floors and ceilings 4. A separate $16.5 billion of cash deposits and financial instruments protects it if customers fail to meet their obligations 4. Remaining performance obligations, contracted revenue not yet recognized, stood at $59.8 billion at quarter-end, rising to $91.1 billion with agreements signed after the close 4.
The contract book in layers: $93.9B of floors, $16.5B against default
Data
| Value | |
|---|---|
| Minimum book value at floor prices | $93.9B |
| Obligations incl. post-quarter signings | $91.1B |
| Obligations at quarter-end | $59.8B |
| Guarantees against customer default | $16.5B |
Half the sector's multiple, on boom-priced earnings
At 16.7 times trailing earnings, against a 34.0 median for S&P 500 technology stocks, SanDisk trades at half its sector's multiple 1. Those trailing earnings were earned at boom prices. Fiscal fourth-quarter revenue of $8.97 billion rose 51% from the prior quarter, with about two-thirds of the gain from higher prices 6; data-center revenue more than quadrupled in one quarter, to $2.98 billion 5; gross margin reached 84.6% 6.
Quarterly revenue ran from $1.9 billion to $8.97 billion in eight quarters
Data
| Revenue | |
|---|---|
| Sep '24 | $1.88B |
| Dec '24 | $1.88B |
| Mar '25 | $1.7B |
| Jun '25 | $1.9B |
| Oct '25 | $2.31B |
| Jan '26 | $3.03B |
| Apr '26 | $5.95B |
| Jul '26 | $8.97B |
The ceilings cap the upside as well. The agreements are set to cover about half of what SanDisk ships in fiscal 2027 6, and on that volume the company collects no more than the ceiling however high spot flash climbs, so a rising market is partly given up in exchange for a floor in a bust. The $16.5 billion of guarantees covers a customer defaulting, not falling prices 4. Management's fiscal 2028 to 2030 targets assume 80% gross margin, below today's level 4.
Gross margin went from 22.5% to 84.6% in six quarters
Data
| Gross margin | |
|---|---|
| Sep '24 | 38.6% |
| Dec '24 | 32.3% |
| Mar '25 | 22.5% |
| Jun '25 | 26.2% |
| Oct '25 | 29.8% |
| Jan '26 | 50.9% |
| Apr '26 | 78.4% |
| Jul '26 | 84.6% |
October 29 converts the argument into numbers
The bull case is not empty. The brokerage Mizuho lifted its price target to $2,050 from $1,875 in the same week that Evercore−0.99% — Evercore, down 0.99 percent today ISI, another brokerage, cut its own to $2,800 from $3,100 7. Guidance calls for $10.3 billion to $10.8 billion of fiscal first-quarter revenue at 83% to 85% gross margin 56, TrendForce expects NAND contract prices to rise another 15% to 20% this quarter 6, and no downturn has tested the floors yet 6.
The calendar settles it inside a week. SK hynix, the Korean memory maker, reports third-quarter results on October 28 9; SanDisk follows on October 29 7. Two lines matter: how much revenue ran through the contracted sleeve, and whether the second-quarter margin guide holds the 83% floor.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
